Despite acknowledging the massive poverty in the country, with over 129 million affected, mostly traced to the current reforms under its recommendations, the World Bank is insisting that Nigerians must continue putting up with the situation and never think of reversing the ongoing policies of President Bola Tinubu.
Two key policies – removal of subsidy on Premium Motor Spirit (PMS), otherwise known as petrol Tinubu announced during his inauguration on May 29, 2023 and floating of the local currency, the naira, which followed some weeks after, had plunged the citizenry into the type of hardship never witnessed in the history of the country due to the soaring cost of living.
But regardless, the Bretton Wood institution, is insisting that the policies must be sustained for years to come despite protestations in many quarters that the only visible result is more poverty in the land, adding that any reversal would take the country back to the starting point.
In a report released by the Bank on Thursday, detailing its findings and position, christened: Nigeria Development Update Report, which stated that over 129 million Nigerians are currently trapped in poverty, it also referred to the headline inflation that has forced millions into hunger.
“With growth proving too slow to outpace inflation, poverty has risen sharply. Since 2018, the share of Nigerians living below the national poverty line16 is estimated to have risen sharply from 40.1 per cent to 56.0 per cent. Combined with population growth, this means that some 129 million Nigerians are living in poverty. This stark increase partly reflects Nigeria’s beleaguered growth record. Real GDP per capita has not recovered to the level it was at prior to the oil price-induced recession in 2016,” the document, read.
It added: “The COVID-19 pandemic compounded this drop in economic activity. Moreover, growth is failing to outpace inflation: large increases in prices across almost all goods have diminished purchasing power.
“Multiple shocks in a context of high economic insecurity have deepened and broadened poverty, with over 115 million Nigerians estimated to have been poor in 2023. Since 2018/19, an additional nearly 35 million people have fallen into poverty, so that more than half of Nigerians (51.1 per cent of the population in 2023) are now estimated to live in poverty.”
The report also acknowledged the increase in the poverty index from 115 million in 2023 to 129 million in 2024, meaning that 14 million Nigerians have become poorer this year, which it attributed to the surge to inflation, poor economic management, and external shocks.
It said: “Several shocks have contributed to this major increase and changing profile of the poor: the COVID-19 recession, natural disasters such as flooding, growing insecurity, the high cost of the demonetization policy in Q1 2023, high inflation, and low economic growth.
“Previous domestic policy missteps compounded the effects of the shocks, particularly rising inflation, eroding the purchasing power, especially of urban households, pushing many into poverty. The government is ramping up the cash transfer programs to support economically insecure households to help weather the crisis.”
Revealing that while poverty remained a rural phenomenon, urban poverty had grown significantly, with 31.3 per cent of urban dwellers now living in poverty, up from 18 per cent in 2018, the report, added: “Being employed, however, is no guarantee of being able to escape poverty.
“Many jobs are not productive and therefore remunerative enough to afford a life beyond poverty. Jobs hold the key to sharing the proceeds of growth. Since Nigeria has a young and growing population, the jobs that can harness the country’s potential ‘demographic dividend’ are needed now.”
Alex Sienaert, now Lead Economist for Nigeria, while weighing in on the report, dismissed claims that the institution seeks to keep Nigeria economically dependent, saying: “I’m in this position of having been the lead economist at the World Bank here in Nigeria on economic policy issues for two years now, and I just want to tell you that I’ve not seen any conspiracy within the World Bank or otherwise to keep Nigeria down.”
He pointed out that Nigeria’s fiscal deficit had shrunk from 6.2 per cent of GDP in 2022 to 4.4 per cent in the first half of 2023, thanks to reforms such as the removal of FX and fuel subsidies.
Ndiame Diop, the World Bank Country Director for Nigeria, who urged the Federal Government to sustain its reforms, warning that reversing them would be disastrous, stated: “Reversing these reforms would be detrimental and would spell doom for Nigeria.”
Stressing that the reforms were difficult but essential to stabilise the economy, he noted that the World Bank was willing to offer Nigeria more loans as well as technical assistance in support of ongoing reforms, adding: “Yes, we do have in the pipeline for this fiscal year several projects financed by the World Bank. These are government projects, implemented mostly by the states.
“Nigeria is a very important partner for the World Bank. We have been providing technical support, but also financing. But what is really important is that our financing comes with technical support and implementation support, and really making sure things go according to plan.”